Helmerich & Payne: Do U.S. Shales Need 1,000 Modern Rigs?
Richard Zeits • 23 Comments
Richard Zeits • 23 Comments
Helmerich & Payne: Are Premium Land Rigs Overbuilt?
Fri, Jul. 15, 10:02 AM
- Thomas Lee from Fundstrat Market & Equity Research ("our research process combines both top-down strategy and bottoms-up fundamental views, to develop a roadmap of practical and useful investment insights for our clients") identifies 15 stocks that meet his criteria for his current “highest conviction” strategies, which he calls “laggards become leaders” and “stocks are the new bonds.”
- The following stocks are in 1 of 16 groups that have lagged in the bull market (laggards), and have dividend yield greater than the their long-term bond yield (stocks are the new bonds): APD, CAT, CSCO, CVX, HP, IBM, OXY, PCAR, PG, PX, RL, SLB, T, VZ, XOM.
Tue, Jul. 12, 10:58 AM
- Forum Energy Technologies (FET +3.6%) is downgraded to Underweight from Neutral with a $10 price target at J.P. Morgan, which says expectations "have run too hard too fast" with other North American beta plays, and "a re-rating could lead to underperformance [in H2 2016] relative to equipment peers."
- FET shares have risen significantly since February on better expectations for normalized activity in the next cycle, but the firm sees the possibility for a retreat as expectations reset in H2 if oil prices struggle to move higher and rig counts remain volatile.
- JPM's other North American onshore Underweight-rated stocks that could underperform in a retrench in expectations include Helmerich & Payne (HP +4.2%) and Patterson-UTI Energy (PTEN +2.6%).
Tue, Jun. 21, 3:39 PM
- Helmerich & Payne (HP +2.2%) is higher after KeyBanc upgrades shares to Overweight from Sector Weight with an $80 price target, calling HP "the best positioned land drilling contractor" in an environment poised for a rebound in U.S. land rig activity, also boasting "the strongest balance sheet in the industry."
- The firm notes that HP owns about half of the 1,500 horsepower AC-Drive land rigs that are currently idle, and these rigs will "likely be the rigs of choice as the market recovers."
- KeyBanc says HP should supply about half of incremental demand for horizontal drilling services within the next few years, which will further solidify its market leadership.
Wed, Jun. 1, 3:54 PM
- Land-based oil drillers "all look overvalued," Credit Suisse analysts say as they downgrade Helmerich & Payne (HP -2.1%), Patterson-UTI Energy (PTEN -2%) and Precision Drilling (PDS -4.6%) to Underperform from Neutral, and Nabors Industries (NBR -3.8%) to Neutral from Outperform, predicting current spot rates likely will fall when incremental rigs go to work.
- Among the group, the firm sees HP as "the worst offender" on valuation, with overly optimistic assumptions for $35K spot market dayrates and forgiveness of deferred tax liabilities still not enough to justify the current price based on its rig count, while NBR is "the relative winner due to its international exposure."
- The firm prefers Baker Hughes (BHI +0.1%) and Halliburton (HAL -0.1%) in the sector due to their North American exposure and expectations of execution, while Schlumberger (SLB -0.6%) "has valuation headwinds and issues with exploration, deepwater and international exposure, but longer-term exposure to the stock is essential."
- Now read Moody's: Drillers will be the last to recover in the oil patch (May 16)
Mon, May 16, 7:15 PM
- Drilling companies will be the last to recover among the oil and gas industry when the recovery eventually arrives, Moody's says.
- North American land-based drillers will be stressed through the end of next year as contracts, signed when demand for their services was higher, expire and as prices for their services remain depressed, according to the report.
- The ratings agency predicts that Parker Drilling (NYSE:PKD) and Pioneer Energy Services (NYSE:PES) could breach one of their existing financial covenants by the middle of next year.
- Moody's thinks the best-positioned companies through the ongoing rout are Helmerich and Payne (NYSE:HP) and Precision Drilling (NYSE:PDS), which have "the most high-quality rigs, which will be the first to re-enter the market when industry conditions improve sometime after 2017."
Tue, May 3, 3:58 PM
- Helmerich & Payne (HP -2.2%) is maintained with a Buy rating and a higher target price of $72, raised from $63, at UBS following mixed FQ2 results.
- UBS says that while some temporary stacking and personnel costs likely will go away by Q4, it appears HP's underlying profitability is tracking below expectations, and with declining EBITDA, the company likely is consuming a small amount of cash to pay the dividend later this year.
- However, the firm says a strong contract backlog and nearly $900M of cash and equivalents leave HP well positioned to sustain the dividend beyond 2017 if desired.
- UBS is only one of a mixed bag of analyst notes on HP today, as Scotia Howard Weil downgrades shares to Sector Perform and Goldman Sachs cuts its price target to $58 from $60, while Cowen, Susquehanna and Stephens join UBS in raising their price targets.
- Now read Helmerich & Payne: All you need to know about Q2
Mon, May 2, 6:17 AM
Sun, May 1, 5:30 PM
Fri, Apr. 15, 12:39 PM
- Investor hopes of further gains in oil prices are unrealistic, and expectations for U.S. onshore drilling stocks are sporting inflated multiples, J.P. Morgan analysts say as they reduce ratings where expectations may have jumped too far too fast.
- The firm downgrades Helmerich & Payne (HP -2.6%) and Patterson-UTI (PTEN -3.6%) to Underweight from Neutral with respective $39 and $13 price targets, saying that while both have strong management teams and solid execution should continue, it is "skeptical of the macro environment required to deliver on the current elevated multiples embedded in each stock."
- Superior Energy (SPN -1.2%) is downgraded to Neutral from Overweight with a $13 price target, with JPM saying SPN has faced several challenges in recent quarters and likely will have a difficult H1, although cost adjustments should provide some support to the company in H2.
- Now read Anadarko, Antero upgraded; Southwestern, EP Energy cut at J.P. Morgan
Thu, Mar. 17, 3:43 PM
- Offshore oilfield service companies with pristine balance sheets have significantly outperformed onshore service peers, but Morgan Stanley's Ole Slorer finds better value for now in companies with similar business exposures with slightly higher but manageable risks.
- He upgrades Superior Energy Services (SPN +6.8%) to Overweight from Equal Weight with a $15 price target, upped from $13.50, and maintains Nabors Industries (NBR +6.8%) at Overweight with a $13 price target, acknowledging higher risk in the two companies but believing they have substantial liquidity and potential for cash flow neutrality even if the current downcycle persists longer than expected.
- However, Slorer downgrades RPC Inc. (RES -2.9%) to Equal Weight from Overweight and Helmerich & Payne (HP +1.1%) to Underweight, noting that both companies are high quality operators with nearly debt-free balance sheets but whose stocks had significantly outperformed the sector YTD to a point where valuations look less attractive.
Fri, Mar. 4, 3:28 PM
- Moody's downgrades five more oil and gas names, all with negative outlooks, but shares are unaffected amid a strong showing today in the energy sector:
- Helmerich & Payne (HP +5%) to Baa1, citing significantly decreasing cash flow resulting from the collapse in U.S. onshore drilling activity.
- Nabors Industries (NBR +0.6%) to Ba2, expecting high business and financial risks in a persistently weak global rig market, causing material degradation in credit metrics through 2017.
- Parker Drilling (PKD +0.1%) to B3, reflecting the challenging outlook for land drilling and rentals tools businesses in North America.
- Pioneer Energy Services (PES +16.5%) to Caa3, driven by the material deterioration in credit metrics through 2015 and expectations of continued deterioration through 2016.
- Precision Drilling (PDS +11.9%) to B2, reflecting lower cash flow and weak leverage resulting from the collapse in drilling activity.
Thu, Feb. 11, 7:12 PM
- Short interest as a percentage of float for the energy sector surpassed 12% at the end of January to its highest level in more than a decade, according to research from Bespoke.
- Six of the eight most heavily shorted stocks among the S&P 500 resided in the energy sector, all with percentage of float levels exceeding 20%: Chesapeake Energy (NYSE:CHK), Transocean (NYSE:RIG), Southwestern Energy (NYSE:SWN) Diamond Offshore (NYSE:DO), Consol Energy (NYSE:CNX) and Helmerich & Payne (NYSE:HP).
- GameStop (NYSE:GME) was the most heavily shorted stock in the S&P 500, Bespoke says.
Thu, Jan. 28, 6:11 AM
- Helmerich & Payne (NYSE:HP): FQ1 EPS of $0.15 may not be comparable to consensus of -$0.07.
- Revenue of $487.85M (-54.0% Y/Y) beats by $29.2M.
Wed, Jan. 27, 5:30 PM
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Dec. 31, 2015, 8:45 AM
- Heartland Payment Systems (NYSE:HP) is downgraded by Piper Jaffray to a Neutral rating after the investment firm had it slotted at Overweight.
- Piper lowers its price target on Heartland to $90 from $100. HPY closed at $95.34 yesterday after rising 51% over the last 90 days.
Dec. 28, 2015, 11:45 AM
- WTI crude is down 3.2% to $36.90/barrel, and Brent crude down 2.5% to $36.95/barrel, leaving prices close to 11-year lows. Energy industry firms are among the biggest decliners on a day the S&P is down 0.6%.
- Fears about excess supply appear to be weighing once more. OPEC figures point to a global oil supply glut of more than 2M barrels (over 2% of global demand); a smaller glut is expected next year. Meanwhile, Japanese government data indicates the country's oil product sales fell to a 46-year low in November, and European data suggests the continent's oil product demand growth turned negative in October.
- The biggest casualties include Whiting Petroleum (WLL -9.9%), Oasis Petroleum (OAS -8.2%), Vanguard Natural Resources (VNR -12.5%), Denbury Resources (DNR -8%), SandRidge Energy (SD -8.1%), SandRidge Permian Trust (PER -10.9%), SandRidge Mississippian Trust (SDT -7.5%), U.S. Silica (SLCA -6.2%), Marathon Oil (MRO -6.7%), C&J Energy Services (CJES -8.1%), MV Oil Trust (MVO -9.2%), Bonanza Creek (BCEI -6.4%), Parker Drilling (PKD -7.9%), and Continental Resources (CLR -5.9%).
- Other notable decliners include Kinder Morgan (KMI -5%), Williams Partners (WPZ -4.4%), EOG Resources (EOG -3.4%), Cheniere Energy (CQP -3.6%), SeaDrill (SDRL -3.5%), Encana (ECA -2.8%), Devon Energy (DVN -2.7%), Ensco (ESV -3.8%), Hercules Offshore (HERO -4.7%), Atwood Oceanics (ATW -4.9%), Helmerich & Payne (HP -3.8%), and Pioneer Natural (PXD -2.6%).
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG, DRIP, GUSH
Helmerich & Payne, Inc. engages in contract drilling of oil and gas well. Its contract drilling business operates through the following segments: U.S. Land, Offshore, and International Land. The U.S. Land segment operations drilled primarily in Oklahoma, California, Texas, Wyoming, Colorado,... More
Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
Country: United States
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